200k To Save / Invest .......

mvteng

NMA IFA?

Hijacking this post slightly - I also have a similar large sum to invest.

Can you give more information about an NMA IFA & how I would locate one in Edinburgh.

Thanks in advance

GCH888

dunstonh wrote: »

Why not?

If the IFA is remunerated on performance then the interests are aligned with the individual in that the higher the fund value, the more the adviser is paid.

Does this mean an IFA would perhaps work "harder" on your investment if he/she was compensated on a commission basis rather purely on a standard fee?

dunstonh

Does this mean an IFA would perhaps work "harder" on your investment if he/she was compensated on a commission basis rather purely on a standard fee?

We are talking about individual personalities here. You could have an old model adviser taking upfront only commission to the maximum doing a splendid job just as you can have an NMA IFA charging more and doing nothing.

However, if you get an NMA IFA doing nothing, then at least you can go to another IFA and get the portfolio transferred to the other IFA and that stops the old one from being paid. When your business is built on looking after existing clients and growing it from there, you wouldnt last long if you dont look after that business.

Can you give more information about an NMA IFA & how I would locate one in Edinburgh.

There is no official term NMA. It is a business model that identifies advisers that focus on investment management and reporting on an ongoing basis. Their remuneration is typically lower and paid for the length of the investment rather than old model advisers (where upfront commission is taken). For example, an NMA adviser may take 1% initial commission but 0.5% p.a. Old model would take 7% upfront with no ongoing annual amount. That annual amount on NMA basis is typically the natural commission that funds generate and not additional (although some may try to charge more on top but there isnt a need to). With the old model, the provider indemnifies usually around 4 years worth of fund based commission and adds it to the full initial. The provider then keeps the 0.5% p.a. for themselves. So, this makes old model quite a bit more expensive.

So, the theory is that old model has no buy in to the performance of your investments as they are paid on the amount you pay in. Whereas old model gets the bulk of their remuneration (sometimes all of it) on the growth of the investments. Who is going to spend more time with the investment research; The one that gets paid regardless of performance or the one that is paid on performance?

The other thing is that NMA does well is standardise the remuneration across all products, funds and tax wrappers. No bias will exist towards a product. Indeed, it can make high commission products quite attractive as a lot of that commission gets rebated.

how I would locate one in Edinburgh.

Phone around the advisers and ask them if they work to new model charging basis and what those charges are. Typically, you should be looking for around 1.8% initial and 0.5% p.a. natural fund based. No more than that. Get less if you can. Many of us work on the 1% plus 0.5%p.a. Its just a case of finding one in your area.

Stuart_D_3

I agree with Conrad.

Property has proven to be the best investment time over time, and with gearing you could do a lot better than with investing into ISA's etc.

Obviuosly the trick is to choose a rising market. I have recently bought an apartment in Calabria, Italy. Prices are the lowest in the country and there are huge investments (from EU and Italian government) taking place in order to improve the infrastructure in the area. An article I read in the Sunday Times this January prompted me to take the plunge.

If you want more info have a look at a company called First step abroad. My inspection trip was free, and I ended up buying a beachfront, penthouse apartment with great sea views for less than £100k. You can also get a 80-100% mortgage in Italy, current rates 3.86% interest only. If I had your money I would have bought 2 or 3, and would have looked to sell 1 or 2 before completion, using the profit for another investment or to pay for the one I want to keep. As long as the market is rising, that would be a fairly safe bet.

SD

dunstonh

Property has proven to be the best investment time over time,

Evidence please? and what do you mean by time?